In Sync with California

The countdown is on. In less than 18 months, pharma manufacturers have to be in compliance with a California state law that requires drug companies to use an electronic pedigree system if they want to distribute drugs in the state. California isn't the first state to require a drug pedigree, but its law significantly raises the bar for companies. It demands "an electronic record, containing information regarding each transaction resulting in a change of ownership of a prescription drug, from sale by manufacturer, through acquisition and sale by a wholesaler, until final sale to a pharmacy or person furnishing, administering, or dispensing the prescription drug." Where the burden of creating a pedigree previously fell on distributors, under the California law, manufacturers are responsible. The California Board of Pharmacists also mandated that manufacturers be required to serialize their products—that is, to uniquely distinguish one physical item from another, even if they all come from the same lot and batch.

"The California Board of Pharmacists inspectors expect to be able to walk into any distributing node—a manufacturer's warehouse, a distribution center, a chain of drug stores—and be able to point to an item and ask for, on the spot, a record for the drug's chain of custody," says Jamie Hintlian, a partner in Accenture's health and life sciences practice.

Some manufacturers, such as Pfizer, Purdue, and GlaxoSmithKline, have been working on e-pedigree programs for years, but many are playing last-minute catch-up.

"The industry is mobilizing, and there are some companies that are more ahead and some that are just beginning their journey," says Hintlian. "By and large, across the board, the industry is paying attention to what it needs to do fundamentally to comply with the most daunting and imminent legislation in the state of California."

Chain of Custody

The standards organization for bar coding is called EPCglobal. It ratified an electronic pedigree standard in January 2007, and it is currently certifying a number of pharmaceutical companies to engage in e-pedigree.

According to SupplyScape, a software vendor specializing in the pharmaceutical supply chain, the EPCglobal standard accommodates a variety of approaches in use today for drug distribution. The company notes the following:

Electronic pedigrees are encouraged, but the standard also specifies how paper pedigrees can be scanned and embedded into the electronic record.

Numerous product-serialization approaches can be used, including radio frequency identification (RFID) and many types of bar code.

There is, of course, far more to a working e-pedigree system than technology. When you join EPCglobal, you get a book called Revolution at the Checkout Counter. It explains the give-and-take between retailers and manufacturers that led to the widespread use of bar codes in the 1970s and 1980s.

"We see the same kind of conversations today with FDA, EPC [electronic product code], and RFID," says Bob Celeste, the standards group's director of healthcare. "Manufacturers are saying that they don't want to go through tagging items if no one is going to read them, and retailers are saying that they don't want to buy the reader infrastructure if no one is going to tag things."

To encourage others to adopt the new technology, companies such as Purdue and Pfizer are starting to become more verbal about the benefits they are reaping from RFID. "The issue here is a basic business question," Celeste says. "Who is going to get the benefit throughout the supply chain? And who is going to pay for it? What is promising is how much cooperation you are seeing between the trading partners. There is cooperation between every company, and that is real progress."

Pedigree is not a new concept. Chain-of-custody documents have been used for years, but they're not easy to use: Documents get lost, signatures can be forged, and the vast amount of paperwork generated can be difficult to deal with when it comes time for an audit.

"With the volume of product that we move through our facility, there would be no possible way for us to handle a paper pedigree," says Shay Reid, vice president of integrated solutions at the distributor AmerisourceBergen.

In Florida, AmerisourceBergen implemented an e-pedigree system using an electronic data interchange (EDI) connection to facilitate the transfer of the e-pedigree. The connection, however, proved cumbersome and slow. "Typically," Reid says "it took us anywhere from six to eight weeks to establish an initial connection with trading partners and transmit an electronic pedigree."